Tourism and recreation saw the biggest cost increases of any sector after the budget
- Hospitality companies have warned that the budget could lead to more job losses
Britain’s pubs, restaurants and hotels saw the fastest rise in costs of any business sector last month after being hit by tax and pay changes in the October budget.
Companies in the tourism and leisure sector also posted the steepest price increases of any sector monitored, according to the latest Lloyds UK Sector Tracker.
Hospitality companies and trade bodies have warned about the Labor government’s budget could lead to more job losses and site closures.
Chancellor Rachel Reeves announced that the discount hospitality operators receive on their business rates would be reduced from 75 per cent to 40 per cent, capped at £110,000 per business.
Employers will also pay a national insurance rate of 15 per cent on employee salaries above £5,000, instead of the current 13.8 per cent levy on wages above £9,100.
And the National Living Wage will rise by 6.7 per cent to £12.21 per hour, while the minimum wage for 18 to 20-year-olds will rise by 16.3 per cent to £10 per hour.
Budget impact: UK pubs, restaurants and hotels saw the fastest rise in costs last month, according to the latest Lloyds UK Sector Tracker
Since these measures were announced, pub chains including JD Wetherspoon, Fuller’s and Young’s have warned of multi-million pound costs.
Lloyds UK said the level of cost increases imposed on tourism and leisure businesses last month on the index was 67.5, up from 66.3 in October.
Any number above 50 indicates an overall increase compared to the previous month, and a number below 50 indicates a decrease.
Only two of the fourteen sectors monitored by Lloyds did not increase prices in November, as they did the month before.
Lloyds also found that companies’ future output expectations fell to the worst level in almost two years.
Among the sectors with the largest contractions in output were healthcare, with a score of 40.8, followed by metals and mining, at 42.3, and household products manufacturing, at 42.7.
The number of companies saying inflationary pressures could impact their future operations also rose to more than nine times the long-term average: 9.23 in November versus 3.45 in October.
Nikesh Sawjani, senior UK economist at Lloyds, commented: ‘The weakening of output expectations and the rise in inflation concerns reflect the headwinds companies are currently facing.
“As we reach the end of 2024, businesses are already planning and preparing for what they hope will be a strong start to the new year.”
British inflation rose to 2.3 percent in the 12 months ending in October, just above the Bank of England’s 2 percent target.
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